Startup funding stages provide insight into the company’s future.
Pinpointing a startup’s position on its funding path is like knowing a person’s age: It doesn’t tell you everything about maturity, but it provides context. Certainly, funding stories vary widely from company to company, and the level of funding in each stage changes with the market. However, this well-worn path gives us insight into where any given company is in its growth trajectory.
Bootstrapping
Some startup founders opt out of venture capital: They self-fund for a short time until revenue can support growth (usually slower). An important benefit to founders is that they do not relinquish control to investors.
Pre-seed
Companies here are just getting started and the team may only include the founders. Financing does not come from institutional investors but from friends, family or possibly angel investors. Funding is a very low amount, often below $150k.
Seed
Here companies are trying to gain traction and find product/market fit, plus build a small team. Round sizes range between $10k–$2M, often through angel investors or VC firms that specialize in seed rounds. Larger seed rounds have become more common in recent years.
Series A – B
In general (again: exceptions are the rule), venture capital firms don’t get involved until Series A and beyond. These startups usually have found some product market fit and capital is used to scale quickly. These funding rounds range on average between $1M–$30M.
Series C and beyond
These companies are larger and well established. The rounds are usually $10M+ and are often much larger. D and E rounds may help a company prepare for exit: to be acquired or IPO.
You can expect these tracks to ebb and flow over the next years as market conditions change, yet they provide important guideposts as a company comes of age.
Hat tip to Crunchbase, whose round amount ranges we relied upon (and which they have updated 9/18).
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